Treasury integration post M&A: An opportunity for strategic change
LSEG’s acquisition of Refinitiv came as an opportunity to take a strategic approach to improve operations, processes.
In January 2021, London Stock Exchange Group (LSEG), a UK-based financial market infrastructure company, completed the acquisition of Refinitiv, a financial markets data and infrastructure provider. This was the largest acquisition in the history of the company.
While acquisitions fuel growth for an organisation, they always come with challenges, and for the treasury team at LSEG, it not only meant merging the two treasury organisations but also standardising and integrating their processes, including the implementation of a global treasury management system.
Prior to the acquisition, LSEG’s treasury department was a modest and centralised team with domestic focus. They relied heavily on manual processes to manage their treasury operations.
On the contrary, with $6.25 billion in revenue, over 40,000 customers and 400,000 end users across 190 countries, Refinitiv had a larger treasury department and operated a regional model across multiple geographies. The treasury processes were largely automated and the company used an integrated treasury and risk management platform for treasury operations.
LSEG’s Group Head of Treasury, Oliver Wolfensberger, joined the company and was tasked with merging the two treasury functions and transforming them into a new team fit-for-purpose for the larger, more complex business, with a standardised system and processes.
It was decided that automation was key and LSEG’s processes would be integrated into Refinitiv’s existing integrated treasury and risk management platform. The solution itself met their requirements and the Refinitiv team already had experience using it.
After clearing the initial IT security requirements, the team embarked on the first phase of the project, which was to standardise and integrate LSEG’s processes into the treasury solution. However, there were numerous challenges that the treasury team had to overcome.
While the two different treasury teams used different terminology to describe treasury processes, the companies had over two- thousand bank accounts with multiple key cash management banks globally in addition to the vast number of local accounts, and also used different ERP systems.
Meanwhile, multiple year-end processes overlapped with phase one of the project while there were other processes being introduced across the company, which an already busy team had to navigate.
After six months of implementation, the team is now leveraging the treasury management system to manage the complete treasury suite, from cash management and accounting to in-house banking, to FX, bonds and swaps; all treasury activities are captured.
By consolidating bank data in one single treasury management system, the LSEG treasury team has daily cash visibility, something they didn’t have with their manual processes. At the same time, it is now easier to analyse, and eliminate manual reconciliations and posting of manual journal entries. They have also saved time on deal capture since they no longer have to pull information from multiple spreadsheets.
Additionally, the team has also greatly streamlined the month-end process, thereby significantly reducing the amount of resources spent on this task. More importantly, the team will be able to stay on the latest version of the software without relying on more capital and IT resources.
A well-executed integration plan provides an organisation with increased efficiency and enhanced automation and the treasury team isn’t stopping here. They plan to review all their processes to optimise and leverage the treasury solution to its maximum in phase II.
London Stock Exchange won the EuroFinance Treasury Excellence award in the mastering strategic change category and its Group Head of Treasury, Oliver Wolfensberger will be speaking at the EuroFinance International Treasury Management Vienna conference in September 2022.